Just what Israeli telecoms need

Patrick Drahi's HOT pursuit is great for the market.

French businessman Patrick Drahi met Minister of Communications Moshe Kahlon and his staff for a working meeting last Thursday. This was not the first time that Drahi has met Kahlon, but in contrast to previous meetings, this time Drahi raised more specific issues, which imply that he wants to create a telecommunications group in Israel based on Hot Cable Systems Media Ltd. (TASE: HOT), the Internet services provider (ISP) and international calls business of 012 Smile.Communications Ltd. (Nasdaq:SMLC; TASE: SMLC), and mobile carrier Mirs Communications Ltd.

Drahi demonstrated that he is abreast of delopments in the Israeli telecommunications market. He already knows that the ability to create a telecommunications group is one thing, and dealing with the regulator is something else. He therefore came to Israel to get the feel of which way the wind is blowing, and whether there is any point in pinning hopes on the Ministry of Communications. He wants to know whether, if it won't support him, at least it won't hinder him.

Drahi's entry into the Israeli telecommunications market in general, and his investment in HOT in particular, is one of the best thing that could have happened to the market. HOT urgently needs an investor like him for two main reasons. First, in order to put the past behind it, and to open a new page with a new international strategic investor who knows how to tap the company's potential. In the coming months, we will see HOT entering a new phase. Drahi believes that, within a few years, he can raise HOT to the high level he wants and aspires to.

Second, when it comes to service, especially in telephony, HOT is in a rut. It is enough to look at the company's weakness in the business sector to understand its wasted potential. Around the world, cable companies are perceived as innovators thanks to their ability to provide a complete range of services over one line. They are positioned as competitors of companies that lay fiber optic cables to customers' homes, no less.

At a recent cable conference in the US, Cisco Systems Inc. (Nasdaq: CSCO) and other telecommunications equipment vendors presented solutions than can transmit to the home at 300 Mbps over cable networks.

Drahi undertands all this, which is why he is the best thing that could have happened to HOT.

Published by Globes [online], Israel business news - www.globes-online.com - on November 15, 2009

© Copyright of Globes Publisher Itonut (1983) Ltd. 2009

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